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Common Financial Instruments
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Savings Account
A deposit account held at a bank or other financial institution that provides principal security and a modest interest rate.
Checking Account
A deposit account that allows withdrawals and deposits, meant for frequent or daily use.
Certificate of Deposit (CD)
A savings certificate with a fixed maturity date and specified fixed interest rate that restricts access to funds until the maturity date.
Money Market Account
An interest-bearing account that typically pays a higher interest rate than a savings account, and provides the account holder with limited check-writing ability.
Mortgage
A loan secured by real property, typically used by individuals to purchase a home.
Auto Loan
A personal loan to purchase an automobile, where the car serves as collateral for the loan.
Personal Loan
A type of unsecured loan that is used for personal expenses and does not require collateral.
Credit Card
A card issued by a bank allowing the cardholder to purchase goods and services on credit.
Merchant Services
Financial services used by businesses to handle credit and debit card transactions with customers.
Treasury Bills (T-Bills)
Short-term government securities with maturities of one year or less and sold at a discount.
Corporate Bonds
Debt securities issued by companies to raise capital, with the promise to repay the face value on the maturity date, plus periodic interest payments.
Municipal Bonds
Debt securities issued by states, cities, or counties to finance capital projects like building schools, highways, or sewer systems, and are often exempt from federal taxes.
Government Bonds
Long-term securities issued by the government to finance national spending, known to be low-risk with a fixed interest rate.
Stocks
Equity securities that represent ownership in a corporation, entitling the shareholder to a proportion of the corporation's assets and profits.
Mutual Funds
An investment vehicle made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, and other assets.
Exchange-Traded Funds (ETFs)
Marketable securities that track an index, a commodity, bonds, or a basket of assets like an index fund, and are traded on stock exchanges.
Derivatives
Financial securities with a value that is reliant upon, or derived from, an underlying asset or group of assets—a benchmark.
Real Estate Investment Trusts (REITs)
Companies that own, operate, or finance income-generating real estate across a range of property sectors, required to distribute at least 90% of taxable income to shareholders in the form of dividends.
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